What Is Systemic Risk? Does It Apply to Recent JP Morgan Losses? [May 24, 2012]   [open pdf - 254KB]

"JP Morgan recently disclosed that it suffered significant losses in a unit that traded complex financial instruments. Congress will be examining the JP Morgan trades and oversight by JP Morgan's regulators. Two of the questions that policymakers might ask are could the JP Morgan losses or similar trades trigger another financial crisis and how would the Volcker Rule in the Dodd-Frank Act have applied to the JP Morgan trades? This report explains general systemic risk analysis. It evaluates recent JP Morgan trades in light of our understanding of sources of systemic risk. If the sizes of the losses remain small, it appears extremely unlikely that JP Morgan's reported losses in its asset liabilities management unit could trigger a financial crisis or systemic event."

Report Number:
CRS Report for Congress, R42545
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